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Workers’ Compensation – General Legal Principles

Legal Resources

In the early 1960’s Larson, a former US Secretary of Labor, wrote a definitive book citing each of the main points of Workers’ Compensation law throughout the United States, as well as hundreds of exceptions and gray areas that the courts had decided throughout the years.  This book is still a standard on the shelf of every Workers’ Compensation attorney and judge.

WorkCompResearch.com has compiled an enormous web-based database including state and federal statutes, rules, forms, medical fee schedules and case history.  This is an important resource which is used on a daily basis by attorneys, insurance carriers, claims administrators, adjustors, employers and many in the medical professions.

The Basic Elements of Workers’ Compensation Statutes

The Compensable Injury Requirement
The first and most basic step when an injury occurs is to ask the question – is this a work-related injury?  A worker is automatically entitled to certain compensation whenever he or she suffers from an accidental personal injury (or in some states occupational disease) arising out of and in the course or scope of employment. There are differences among the states as to the exact language employed to qualify the injured worker for Workers’ Compensation benefits, with some states having peculiar meanings to some of the same wording. The word "accident" is interpreted differently in the laws of states. Not all states even have that word in their statutes. The meanings of the phrases "arising out of" and "in the course" or "scope" of employment are also different between the states, and are the subject of countless court cases.

·        “Arising out of“ - The injury was caused by a risk to which the worker was subjected by his or her employment. 

·        “In the course of“ - This is a term which considers the time, place and circumstances of the accident in relation to the employment. Thousands of state court decisions can be found discussing such issues as going to and from work, walking into the plant from the parking lot, coffee breaks, lunch breaks, trips between employment locations, running a company-related errand, company sponsored picnics or sporting events, etc.

“No Fault”
The common theme in all Workers’ Compensation laws is that it doesn’t matter who was at fault when the accident occurred, although a body of cases has arisen over such issues as horseplay, intoxication, engaging in criminal acts during work, willful disobedience to the instructions of the employer, etc.

Employee vs. Independent Contractor
Coverage is limited to those having the status of an employee, as opposed to an independent contractor. Again, a large number of cases have dealt with the distinction between an employee and an independent contractor, and this distinction is in many cases, hazy, at best.

Because employers realize many advantages (no social security tax, no withholding taxes, no unemployment tax, no medical benefits, no vacation, etc.) in labeling a worker as an independent contractor, not to mention the savings on workers' comp insurance premiums, many employers seek to call their workers independent contractors. However, comp laws generally permit the attorney for the injured worker to challenge whether the status of the employee was that of employee, rather than independent contractor, and an adjudicatory officer in a Workers’ Compensation claim may overrule the employer's characterization of the worker as an independent contractor. The employer’s failure to deduct taxes from the workers paycheck and even a written contract calling the employee an independent contractor often are not the determining factor. The attorney representing the injured worker may be able to demonstrate that despite a written agreement, the worker was, in reality, an employee and not an independent contractor, thereby qualifying the worker for Workers’ Compensation benefits.

Average Weekly Wage
If a worker is completely unable to work, he is entitled to receive a percentage of his normal wage.  Each state sets a different target or percentage of weekly wage.  Typically, average weekly wage is determined by evaluating the employee’s wages for the 13 weeks prior to the injury.  But many court cases have dealt with the calculation of that average weekly wage.  For example, should it include the value of a company car, or what if an employee had a second job, or what if they had two weeks of non-paid vacation during that 13 week period, or what if they just started six weeks before the injury, etc.?

Temporary Total Disability
Temporary Total Disability (TTD) occurs when an employee is completely unable to work for a period of time during treatment.  The employee is entitled to lost income while under active medical care of anywhere from one-half to two-thirds of the worker's average weekly wage . Insurance carriers seeking to terminate a workers' temporary total disability compensation often seek what is called an "independent medical examination" (IME), often by the insurance carrier’s doctor.

Permanent Impairment or Permanent Disability
At some point during recovery the doctors will declare the employee at “maximum medical improvement” (MMI) or “maximum medical recovery” (MMR) at which time the status changes from a temporary situation to a permanent situation.  Most states provide some form of compensation to the injured worker for certain categories of permanent injury. These are not to be mistaken for general damages for pain and suffering which are often awarded in civil lawsuits brought by attorneys within the court system. There is a great deal of variance among the laws of the various states as to the type of injuries which qualify for permanent impairment or permanent disability compensation, as well as the amounts of money allowed for permanent injuries.

Normally at this point the insurance carrier will offer a lifetime settlement which is expected to cover the value of future earnings as well as expected medical costs.  One fairly recent issue is the involvement of Medicare considerations in the settlement.  In certain cases, the people receiving large lump sum settlements spent all the money in the first few years, and then depended on Medicare to cover their medical expenses for the rest of their lives.  Medicare Set Asides have been created to ensure that injured workers are not given access to all of their money right away, but rather a portion of the money each year, to ensure they have enough to cover their own medical expenses without relying on Medicare in the future.

Death Benefits
The surviving spouse and children of a worker who is killed during the course of his employment are entitled to death benefits.  Each state’s statutes vary on how much the survivors are entitled to receive, and on the definition of spouse and dependents.  For example, divorced or separated, children out of wedlock, children over the age of 18, children in college, etc.

It is important to note that unlike a civil damage claim in the Court system, in Workers’ Compensation the focus is not upon grief, mental pain and suffering, or loss of companionship. The focus is upon the loss of income being produced by the deceased worker for the surviving beneficiaries.

Hospital, Medical and Vocational Rehabilitation Expenses
Generally, all reasonable and necessary compensation for medical care required by the injured worker is covered, including prescriptions, medical appliances, etc.  Some states regulate the amounts the medical care providers may charge for treatment, and make charges in excess of the permitted amounts unenforceable by the medical care provider. States differ on the right of the injured worker to choose the person(s) who will provide medical care, with some states leaving this choice entirely up to the injured worker and other states heavily regulating it by requiring that physicians be chosen from panels or selected by the employer.

“Statutory Immunity” of the Employer - Third Party Suits
The worker, in exchange for the certainty of receipt of compensation regardless of fault, under most states’ laws is deemed to have given up his or her common law right to sue the employer for negligence and damages for any injury covered by the statute. This is called the “statutory immunity” of employers. It was one of the historic trade-offs legislatures made to justify requiring employers to pay Workers’ Compensation regardless of whether they were at fault.

Most states retain the worker’s right to sue an outsider (a person or company other than the employer) for negligence or any other tort theory of liability, such as product liability or medical malpractice (associated with the rendering of medical care for the workers' comp injury). These are called third party suits. There are widespread differences among the states as to who constitutes a third-party, what portion of the recovery from the third party suit the worker may keep and what portion of the compensation for damages in the third party suit must be repaid to the employer and its Workers’ Compensation insurance carrier.
 
Insurance
In most states the employer must secure insurance coverage against workers' comp claims through the purchase of private insurance or state-fund insurance. Many states have a procedure for authorizing larger, more secure employers to be their own self-insurer.

Injuries and Occupational Diseases

Covered Injury
In many states an injury must be an event taking place within a relatively short time frame, producing physical harm to the injured worker. Some states require a form of trauma. Some states with laws containing the term “accidental injury” will disallow claims for lifting or strain injuries not produced by a traumatic event such as slipping, tripping and falling, unless the amount of lifting required of the employee can be shown to be unusual for the particular employment. Maryland had just such a peculiar, court-created definition of the term "accident," until it was overturned by a well reasoned decision of the Maryland high court in June, 2003. Other states are not as strict, and will allow almost any claim for an injury which is causally related to work activity. An injured worker should never assume his/her injury is clear cut or covered and should always seek an experienced attorney as soon as possible after the injury.